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tion property as defined in section 49(e). Section 49(e)(1)
defines transition property to mean
any property placed in service after December 31, 1985,
and to which the amendments made by section 201 of the
Tax Reform Act of 1986 do not apply, except that in
making such determination--
* * * * * * *
(B) sections 203(b)(1) and 204(a)(3) of such
Act shall be applied by substituting "December 31,
1985" for "March 1, 1986",
Section 203(b)(1) of the Tax Reform Act of 1986, Pub. L. 99-514,
100 Stat. 2143-2144, provides in pertinent part:
(1) IN GENERAL.--The amendments made by section
201 shall not apply to--
(A) any property which is constructed, recon-
structed, or acquired by the taxpayer pursuant to
a written contract which was binding on March 1,
1986,
(We shall hereinafter refer to the foregoing exception in section
203(b)(1)(A) of the Tax Reform Act of 1986, 100 Stat. 2144, as
the binding contract exception.)
The conference committee report addressing the binding
contract exception states that the binding contract exception
"applies only to contracts in which the construction, reconstruc-
tion, erection, or acquisition of property is itself the subject
matter of the contract." H. Conf. Rept. 99-841, at II-55 (1986),
1986-3 C.B. (Vol. 4) 55. Thus, in order for property to be
transition property within the meaning of section 49(e)(1), it
must be constructed, reconstructed, or acquired by the taxpayer
pursuant to a written contract (1) that was binding on December
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